IAG and easyJet shares set to slump again as Covid-19 cases surge

• IAG and easyJet shares take a hit amid rising Covid-19 cases globally
• British Airways owner IAG says all £2.5 billion rights issue shares taken up
• IATA downgrades 2020 forecasts after ‘worst-ever’ summer season

International Consolidated Airlines Group (IAG) and easyJet shares are coming under renewed pressure as rising Covid-19 cases see stricter restrictions imposed across Europe in an attempt to curb the spread of the virus.

IAG and easyJet shares have fallen 4% on Thursday, trading at 95p and 475p respectively, with the former down 63% and the latter sliding 66% year-to-date.

IAG says that all £2.5 billion rights issue shares taken up

The British Airways owner told investors earlier this month that all the shares in its £2.5 billion rights issue have been taken up after demand exceeded supply.

IAG said shareholders took up 92.75% of new shares during the pre-emptive subscription period which ended on 26 September, with the rest of the shares allocated on a pro-rata basis after investors requested more than double the number of new shares remaining.

Coronavirus cases across Europe are surging, threatening tighter travel restrictions and even the prospect of another lockdown, which would spell disaster for IAG and the airline industry as a whole.

Revenues more than halved at IAG, with the company generating €5.3 billion in revenues for the six months ending 30 June, down from the €12 billion generated over the same period a year prior.

This resulted in IAG reporting a operating loss of €1.9 billion (excluding exceptional items), down from the more than €1 billion in profit it made over that same period in 2019.

‘We continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels,’ IAG CEO Willie Walsh said.

‘Each airline has taken actions to adjust their business and reduce their cost base to reflect forecast demand in their markets not just to get through this crisis but to ensure they remain competitive in a structurally changed industry.'

IATA downgrades 2020 forecasts after ‘worst-ever’ summer season

The International Air Transport Association (IATA) slashed its traffic forecasts for 2020 after what it described as a ‘dismal’ end to the ‘worst-ever’ summer travel season.

‘August's disastrous traffic performance puts a cap on the industry's worst-ever summer season. International demand recovery is virtually non-existent and domestic markets in Australia and Japan actually regressed in the face of new outbreaks and travel restrictions,’ IATA director general Alexandre de Juniac said.

IATA forecasts global traffic in 2020 to be down 66% compared with last year.

‘Traditionally, cash generated during the busy summer season in the northern hemisphere provides airlines with a cushion during the lean autumn and winter seasons,’ Juniac added. ‘This year, airlines have so such protection.’

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